Since 2014, large church-controlled health systems that offer defined benefit pension plans have seen lawsuits filed as to whether such plans are eligible to qualify for the ERISA church-plan exemption, which governs those arrangements. When a retirement plan meets the ERISA church-plan exemption, it is exempt from the typical funding and vesting requirements of ERISA and the Internal Revenue Code as well as from the ERISA reporting and disclosure requirements. As the church-plan litigation moves to the appellate level, two adverse decisions are reached denying ERISA church-plan exemption to two health systems.
Recent comments from an official with the Department of Labor (DOL) indicate that the DOL’s Employee Benefits Security Administration (EBSA) has begun investigating large defined benefit plans to review how plan administrators are keeping track of benefits owed to terminated vested participants and if they are really paying participants like they should be. According to the February 2, 2015 BNA Pension & Benefits Reporter, Elizabeth Hopkins, counsel for appellate and special litigation for the DOL’s Office of the Solicitor, Plan Benefits Security Division, stated at a pension conference that EBSA is interested in monitoring whether plan administrators are following their own procedures to locate and pay out terminated vested participants. In particular, EBSA is investigating how plan administrators locate and pay out terminated vested participants over the age of 70 ½ who are owed required minimum distributions.
Defined benefit pension plans must provide that they will distribute benefits beginning no later than the required beginning date, which for most plan participants means April 1 of the calendar year following the later of (i) the calendar year in which a participant turns 70 ½ or (2) the calendar year in which the participant retires. As we noted in our recent article on the “Top IRS and DOL Audit Issues for Retirement Plans,” plan sponsors have a fiduciary duty to try to locate missing participants, to contact terminated vested participants, and to begin distributing benefits within required timeframes. Failure to pay required minimum distributions after a participant turns 70 ½ is a plan qualification error, and participants who miss required distributions may be subject to a 50 percent excise tax. The DOL has also indicated that it may impose personal liability on plan fiduciaries for any tax consequences owed to their employees. For all of these reasons, it is crucial that plan sponsors ensure that proper procedures are in place, and that plan procedures are being followed, to locate and contact terminated vested participants.
In its first major guidance of 2016, the U.S. Department of Labor has issued a definition of joint-employer status under the Fair Labor Standards Act that is even broader than the definition of joint-employer status issued by the National Labor Relations Board last summer. Coupled with its 2015 guidance on the misclassification of independent contractors, the DOL has greatly expanded the definition both of who is an employee and who is an employer.
Happy 2016! It’s time to take a look at what this year will bring (apart from an Olympic Games and apparently lots of rain…). Here are the topics we will be keeping an eye on.
More employees on FMLA leave seem to moonlight during the last months of the year, which leads to increased inquiries from employers about suspected FMLA abuse.
Now, faced with an aging baby-boomer generation and increased costs related to disability litigation, the U.S. Department of Labor’s Employee Benefit Security Administration (DOL) has proposed new rules that would revise and strengthen the current rules for claims adjudication of disability claims under welfare and retirement plans.
A new obligation has been introduced requiring large commercial organisations operating in the United Kingdom to publish a “slavery and human trafficking statement” at the end of each financial year.
The requirement extends to all commercial organisations in any part of a group structure (wherever incorporated, and whether a company or a partnership) that carry on a business, or part of a business, supplying goods or services in any sector in the United Kingdom and have annual turnover of at least £36 million. This includes the turnover of any subsidiary undertakings, regardless of where those subsidiaries are based or operate.
Recognized for outstanding contributions in the category of Labor and Employment, McDermott’s Employee Benefits Blog has been selected from more than 2,000 nominees to be one of only 250 blogs chosen to compete in The Expert Institute’s Best Legal Blog Contest. The blog’s editors, Diane Morgenthaler and Maureen O’Brien, welcome your support in voting. The voting polls close today and the process is very simple.
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“Massive terminations” occur in China when an employer terminates more than 20 employees or more than 10 percent of its total employees at one time. Even though there are no official statistics on massive terminations of employees in China, recent news reports indicates an increase based on overseas investment leaving China. This article provides an overview of some of the common characteristics of massive terminations and of the issues companies with Chinese employees should consider in implementing a massive termination.
On 6 March 2015, the German Bundestag passes a law (the Frauenquote) that aims to ensure the equal participation of women and men in the management of business and public office. The Frauenquote entered into force on 1 May 2015. The new regulation, although commonly referred to as a “women’s quota” is legally constructed to ensure that both genders are represented by as many individuals as necessary to meet the mandatory statutory minimum quota.
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